Ericsson(US:ERIC) ZACKSยท2024-07-12 15:05Core Insights - Ericsson reported a net loss of SEK 11 billion ($1.03 billion) in Q2 2024, compared to a net loss of SEK 0.6 billion in the same quarter last year, primarily due to non-cash impairment charges and declining net sales [1] - The company's revenue for Q2 2024 was SEK 59.8 billion ($5.59 billion), down 7% year over year, but exceeded the Zacks Consensus Estimate of $5.29 billion [9] - The Networks segment saw a revenue decline of 11% year over year, generating SEK 37.7 billion ($3.53 billion), although it surpassed revenue estimates [2][8] Revenue Breakdown - Revenue from South-East Asia, Oceania, and India fell to SEK 7.7 billion ($720 million) from SEK 13.8 billion in the prior-year quarter, while North America saw a 15% increase in revenue to SEK 16.6 billion ($1.55 billion) [3][8] - The Cloud Software and Services segment contributed SEK 15.2 billion ($1.42 billion) in revenues, slightly up from SEK 15.1 billion in the year-ago quarter, surpassing revenue estimates [16] - Enterprise sales remained flat at SEK 6.5 billion ($608 million), with a 2% year-over-year increase, driven by growth in Enterprise Wireless Solutions [10] Margin and Cost Management - The gross margin for the Networks segment improved to 46.1% from 39.3% in the year-ago quarter, supported by higher IPR licensing revenues and cost reduction actions [2][4] - Adjusted gross margin for the overall company increased to 43.9%, up from 38.3% in the previous year, driven by enhanced gross profitability [25] Future Outlook - Management anticipates continued challenges in market conditions due to a slowdown in network investments in India, but expects contract deliveries in North America to improve net sales in the second half of the year [5][8] - For Q3 2024, revenues from the Networks and Cloud Software and Services segments are expected to follow historical seasonal trends, with adjusted gross margin in the Networks segment projected to be between 45-47% [19]